Conventional Loans

A conventional mortgage or conventional loan is a home loan that is not offered or secured by a government entity. Instead of being backed by the U.S. government, a conventional mortgage is made through private lenders, such as banks, credit unions, and mortgage companies. Some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Jumbo loans, which are conventional loans that are not guaranteed by Fannie Mae and Freddie Mac, are guaranteed through private lenders.

Conventional loans typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan. A conventional loan is a good option for borrowers who have a solid credit score and little debt. Borrowers who are able to pay at least 20% of the loan upfront can avoid Private Mortgage Insurance (PMI), which will lower the monthly mortgage payment. For borrowers who are unable to make a large payment upfront, conventional loans are available with a down payment as low as 3%. Conventional mortgages or loans are not guaranteed by the federal government, and as a result they typically have stricter lending requirements. Debt ratio requirements tend to be more stringent with conventional loans, and lenders generally require a low debt-to-income ratio, as low income and high debt scenarios pose additional risk to private lenders. And since the mortgage meltdown of 2007/8, lenders have further tightened the qualifications for conventional loans At Elev8 Mortgage in Bend and Central Oregon, we work with our clients to find the best mortgage product for your needs, and as mortgage brokers we are able to shop around with different lenders to get the most competitive rates.